We came into January with a 200% long position based on a confidence that nearly everybody had the market wrong at the end of 2018. As the month wore on, it became apparent, at least for a period of time, that there were some issues with overall stability. At the beginning of this week, we came in close to 100% net short. Following a Fed that absolutely gave it up to both the stock market and the President (not sure which yet) this week, I covered all of our shorts between yesterday and today, leaving us at a close to 100% long position as we enter February.
Needless to say, it was an active month of near persistent rotation. It all came together, however, as we managed to absolutely obliterate our benchmark (S&P 500) for the month of January. I have eleven months now to turn something very good into something spectacular. This will be my focus.
With that in mind, the shuffling continued today. The morning consisted of both covering all of our remaining shorts (covered NVDA and C yesterday) while initiating a small long position in NFLX and reversing from our short TXT position into a long position. Towards the latter half of the day I took another shot at KL on the short side as the gold trade, especially in this name, has become overcrowded, begging for a rinse to reset some of the foaming at the mouth taking place among investors.
Much like January, I'm going into February with a bullish outlook on technology and interest rates. One of our better trades in January was long rates, which is something that is looking tempting again here very soon. Unlike the beginning of January, however, where I was bullish on metals, I think that gold and silver are due for a reset. This could be a trade that makes me look foolish, I acknowledge that fact ahead of time. Gold and silver could morph into a runaway train on the upside. However, the risk/reward here warrants a position on the opposite side of the consensus long metals trade.
It will be important in 2019 to remain fluid in one's approach. This isn't a one size fits all type of market environment. Rather it is one that should be adapted to continuously as it evolves based on a volatile economic and geopolitical cycle. Any investor who is clingy or possessive of their thesis should just check out now. This isn't the time or the place.
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